The dream of retiring early has captured the imagination of many Americans. Whether the goal is to leave the workforce at 55, 50, or even earlier, early retirement is not simply a matter of accumulating enough money—it is a lifestyle choice, a financial strategy, and a deeply personal decision. Where you live, how you structure your days, and the options available to you financially and legally all play critical roles in making that dream a reality.
Defining Early Retirement Beyond the Numbers:
Early retirement doesn’t always mean “never work again.” For some, it’s the freedom to step away from traditional employment entirely. For others, it’s the flexibility to pursue consulting, part-time work, or passion projects without the pressure of a paycheck.
Before evaluating the numbers, ask yourself:
- What kind of lifestyle do I want?
- Where do I want to live, and what kind of community fits me?
- How will I maintain my health and access to medical care?
- How will I stay mentally engaged and socially connected?
These questions are just as important as any financial calculation, because the success of early retirement depends on aligning your finances with your desired way of life.
How Many People Actually Retire Early — and Why
Retiring before 65 is more common than many think, but the reasons vary widely. Data shows that roughly 15% of Americans plan to retire before 60, with another 22% expecting to leave the workforce between 60 and 64. Among younger workers, more than half believe they will retire before 65. Yet actual experience often differs from expectations. About 58% of retirees report leaving work earlier than planned, with the median retirement age hovering around 62.
Early retirement is motivated by several factors:
- Health concerns: Roughly 46% cite personal health as a reason.
- Employment challenges: About 43% leave due to layoffs, company changes, or burnout.
- Family responsibilities: Nearly 20% retire early to care for a spouse or family member.
- Lifestyle desires: More than half of those under 61 retire because they want time for travel, hobbies, or other pursuits.
- Financial readiness: Only about 21% retire early purely because they are confident in their financial independence.
The takeaway is that early retirement is rarely a single-factor decision. Planning should accommodate flexibility because life circumstances—health, work, family—often influence when you step away from the workforce.
How Much Cash Do You Really Need to “Comfortably” Retire Early?
One of the first questions anyone considering early retirement asks is, “How much do I need in the bank?” The truth is, there’s no single answer—it depends on your lifestyle, goals, location, healthcare needs, and timing relative to Social Security.
A common rule of thumb is to plan for 25–35 times your expected annual expenses in cash and investments. This ensures your portfolio lasts through decades of retirement and provides a cushion for unexpected events. But this is only a guideline—how you define “comfortable” can vary widely.
Some retirees live frugally in affordable locations and make do with far less than the traditional benchmarks. For example, individuals who spend modestly, avoid debt, and live in lower-cost states or countries may retire with only a few hundred thousand dollars and still maintain a satisfying lifestyle. On the other hand, those seeking luxury, frequent travel, or high-end healthcare may need several million dollars to feel financially secure.
Location makes a profound difference:
- High-cost states (California, New York): Maintaining a $100,000 annual lifestyle may require $2.5–3.5 million in savings.
- Lower-cost states (Florida, Texas, Tennessee): The same lifestyle may need only $1.5–2.5 million.
- International options (Portugal, Costa Rica): A couple living comfortably on $3,000 per month might need only $900,000–$1.2 million, assuming conservative withdrawals.
Social Security adds another variable. Early retirees often cannot claim benefits until full retirement age (currently 66–67). Claiming at 62 reduces benefits by up to 30%, while delaying increases monthly income. Benefits depend on lifetime contributions: workers with consistent, moderate-to-high income might expect $2,500–$3,500 per month at full retirement age, while others may receive less.
Ultimately, the cash you need to retire comfortably is highly personal. It depends not just on dollars in the bank but on the lifestyle you want to maintain.
The Geography of Retirement: Cost Matters
Where you live is one of the most powerful levers in determining how early you can retire.
High-cost states like California, New York, and much of the Northeast carry significant financial burdens: housing, taxes, utilities, and daily expenses can consume a large portion of your portfolio.
Lower-cost states such as Florida, Texas, Arizona, Tennessee, and the Carolinas offer meaningful advantages. No state income tax, lower housing costs, and affordable healthcare allow retirees to maintain quality of life on a smaller nest egg. Relocating from a high-cost area to one of these states can accelerate early retirement by five to ten years.
Considering International Options: Portugal and Costa Rica
For Americans seeking to stretch their dollars and explore new cultures, international retirement is increasingly appealing.
- Portugal offers a mild climate, a high-quality healthcare system, and a welcoming expat community. Couples often live comfortably on $2,500–$4,000 per month.
- Costa Rica provides affordable healthcare, warm weather, and lower daily living costs. Many retirees thrive on $2,000–$3,000 per month.
Both countries allow legal residency, which can lead to citizenship, offering added flexibility and mobility for long-term early retirement planning.
Second Passports and Residency-by-Investment:
Securing legal residency or citizenship abroad can give early retirees options to reduce costs, gain mobility, and diversify lifestyle choices.
Portugal: Golden Visa Program
- Investment: €500,000 in qualifying funds (real estate no longer eligible).
- Minimal stay: 7 days in year one, 14 days every two years.
- Citizenship: After 5–10 years of legal residency, plus basic language and clean criminal record.
- Benefits: EU passport, visa-free travel in the Schengen Area.
Costa Rica: Investor Residency Program
- Investment: $150,000 in real estate, business shares, or approved projects.
- Minimal stay: At least one day per year.
- Citizenship: Permanent residency after 3 years; citizenship after 7 years, with Spanish proficiency and civics knowledge.
- Benefits: Dual citizenship allowed, legal residence, and lower-cost living.
The Emotional Dimension: Avoiding Retirement Regret
Even when finances are solid, early retirement comes with emotional risks. Work provides structure, purpose, and social connection. Removing it can leave a void.
- Loss of structure and identity: Days may feel aimless without deadlines or goals.
- Boredom and lack of challenge: Travel or hobbies may not provide sufficient mental stimulation.
- Unretiring: Around 13% of retirees return to work, with 40% citing boredom as the main motivator. Over 26% eventually do so, often in consulting or part-time roles.
Returning to work is not a failure. It restores purpose, social engagement, and mental stimulation while preserving financial resources.
Designing a Holistic Early Retirement:
The most successful early retirees plan beyond finances. They:
- Build a purpose plan alongside a financial plan
- Understand psychological and social needs
- Choose locations that optimize lifestyle and costs
- Explore international residency or citizenship for flexibility
- Allow room for flexible or part-time work
- Reevaluate their plans periodically
Why Partnering with a Financial Advisor Makes Early Retirement More Achievable:
Early retirement is exciting, but it’s also complex. Beyond simply saving and investing, you must plan for taxes, healthcare, Social Security timing, location decisions, and unexpected life events. This is where a trusted financial advisor can make a real difference.
A skilled advisor helps you:
- Clarify your goals: Understanding the lifestyle you want—and the costs associated with it—is the foundation of any successful early retirement plan.
- Create a sustainable withdrawal strategy: Early retirees must carefully balance portfolio longevity, risk, and flexibility to bridge the gap before Social Security and other income sources begin.
- Plan for taxes and healthcare: Advisors can optimize strategies to reduce state, federal, and international tax exposure, and help you budget for pre-Medicare healthcare or international coverage.
- Evaluate location and investment options: Whether you’re considering a move to a lower-cost U.S. state or an international destination like Portugal or Costa Rica, advisors can model the financial implications and potential benefits of residency or citizenship programs.
- Stay on track amid life changes: Market fluctuations, lifestyle changes, or family obligations can impact your plan; a financial advisor helps you adjust without jeopardizing your long-term goals.
At Montecito Capital Management, we take a holistic, client-centered approach. We combine disciplined investment management with careful planning around lifestyle, location, taxes, and legacy goals. Our team works closely with clients to translate the dream of early retirement into a concrete, actionable plan, providing clarity, confidence, and ongoing support as circumstances evolve.
Partnering with an experienced advisor doesn’t just improve your odds of retiring early—it helps you retire smarter, with both security and purpose.
Bringing It All Together
Early retirement is more than a financial goal—it’s a comprehensive life design that blends smart planning, intentional lifestyle choices, and emotional foresight. Relocating from high-cost states to lower-cost U.S. areas—or choosing international destinations such as Portugal or Costa Rica—can significantly stretch your savings and improve overall quality of life.
Financial readiness is foundational, but it’s only part of the picture. Understanding how Social Security fits into your plan, building a sufficient cash cushion to bridge the early retirement years, and considering residency or citizenship options abroad can all increase flexibility and security. Thoughtful planning around taxes, healthcare, and investment strategies ensures that your portfolio can support both day-to-day living and long-term goals.
This is where a financial advisor adds significant value. Advisors help you clarify lifestyle goals, develop sustainable withdrawal strategies, optimize taxes and healthcare planning, and evaluate location and investment decisions. They also provide guidance to keep your plan on track amid market fluctuations or unexpected life changes. Working with a trusted advisor like Montecito Capital Management allows retirees to approach early retirement with confidence, knowing they have a disciplined, objective partner to navigate both the financial and lifestyle complexities.
Equally important are the non-financial elements of early retirement. Maintaining purpose, engagement, and structure is critical to long-term satisfaction. Many early retirees find that pursuing consulting, part-time work, volunteer activities, or passion projects helps prevent boredom, provides mental stimulation, and strengthens social connections. These pursuits often complement the financial plan, allowing retirees to enjoy both freedom and fulfillment.
Ultimately, successful early retirement is about aligning resources with personal goals. It’s a journey that combines prudent financial management, deliberate lifestyle choices, and continuous adjustment as circumstances evolve. With careful planning, the dream of retiring early can become a reality—providing not just freedom from work, but the opportunity to lead a meaningful, enriched life on your own terms, supported by expert guidance every step of the way.